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Published June 12, 2015, 01:51 PM

Roberts, Heitkamp introduce CFTC bill

Senate Agriculture Committee Chairman Pat Roberts, R-Kan., and Sen. Heidi Heitkamp, D-N.D., on Thursday introduced bipartisan legislation to make sure a Commodity Futures Trading Commission regulation allows for sufficient time to send payments to their Futures Commission Merchant (FCM) and to repeal a requirement that impedes international data sharing.

By: Jerry Hagstrom , Agweek

Senate Agriculture Committee Chairman Pat Roberts, R-Kan., and Sen. Heidi Heitkamp, D-N.D., on Thursday introduced bipartisan legislation to make sure a Commodity Futures Trading Commission regulation allows for sufficient time to send payments to their Futures Commission Merchant (FCM) and to repeal a requirement that impedes international data sharing.

At issue is the residual interest rule from the CFTC, which requires futures customers to fully cover the margin of their futures contracts by the end of the day after a trade, the senators said in a news release. The CFTC correctly addressed the concerns of farmers and ranchers by removing the automatic termination of the phased-in period, which would have resulted in the time frame being at the end of the day of the trade, they added.

This legislation ensures the same timeframe and prevents a future rule reinterpretation by the CFTC.

This legislation also addresses problems with access to swaps data needed for regulators to monitor risk or detect market manipulation.

The Dodd-Frank mandated indemnity agreement prevents a swap data repository (SDR) and the CFTC from paying the expenses that arise from any litigation relating to the market data. Many countries do not recognize the concept of indemnification and will not accept an agreement with an SDR. Neither the SDR nor the CFTC can then share reported swap data with them, leading to an inability to collectively look at the swaps market to monitor and access risk, the senators said.

This legislation repeals the Dodd-Frank provision to allow for information sharing among both jurisdictions and market participants.

“The lack of mutual data access and information will hinder regulators’ ability to respond to a financial crisis,” Roberts said. “Incorrect or insufficient responses to a crisis could potentially amplify the financial hardships for Kansans, as exhibited during the 2008 crisis.”

Roberts said the committee plans to incorporate the legislation into the CFTC reauthorization package this year.

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